Form 8-K KINGOLD JEWELRY, INC. For: Nov 13

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

�

�

FORM 8-K

�

�

CURRENT REPORT

Pursuant to Section�13 or 15(d) of the

Securities Exchange Act of 1934

�

Date of Report (Date of earliest event reported): November 13, 2014

�

�

KINGOLD JEWELRY, INC.

(Exact name of registrant as specified in its charter)

�

Delaware	�	001-15819	�	13-3883101
(State or other jurisdiction of incorporation)	�	(Commission File Number)	�	(IRS Employer Identification No.)

�

15 Huangpu Science and Technology Park Jiang’an District Wuhan, Hubei Province, PRC	�	430023
(Address of principal executive offices)	�	(Zip Code)

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Registrant's telephone number, including area code: (011) 86 27 65694977

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�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

�

�	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

�	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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�	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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�	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02

Results of Operations and Financial Condition.

�

On November 13, 2014, Kingold Jewelry, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2014. A copy of the press release is furnished as Exhibit�99.1 to this Form 8-K.

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The information contained in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

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Item 7.01

Regulation FD Disclosure.

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The information set forth in “Item 2.02. Results of Operations and Financial Condition,” including the exhibit referred to therein, is incorporated herein by reference.

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The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

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Item 9.01

Financial Statements and Exhibits.

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The information contained in this Item 9.01 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

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(d)

Exhibits

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Exhibit No.	�	Description
99.1	�	Press release of Kingold Jewelry, Inc., dated November 13, 2014

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�

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�

SIGNATURES

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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�	�	�	�
�	KINGOLD JEWELRY, INC.
�	�	� �
�	By:	�	/s/ Bin Liu
�	�	�	Name:	Bin Liu
�	�	�	Title:	Chief Financial Officer
�	�	�	�	�

Date: November 13, 2014

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�

Exhibit 99.1

�

�

�

��

KINGOLD JEWELRY REPORTS FINANCIAL RESULTS

FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2014

�

Company to Hold Conference Call with Accompanying Slide Presentation on November 14, 2014, at 8:30 a.m ET

Company Reiterates 2014 Guidance of Between 60 metric tons and 70 metric tons of Gold Processed During 2014

�

WUHAN CITY, China, November 13, 2014 - Kingold Jewelry, Inc. ("Kingold" or "the Company") (NASDAQ: KGJI),�one of China's leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, today announced its financial results for the third quarter and nine months ended September 30, 2014.

�

2014 Third Quarter Highlights (all results are compared to prior year period)

�

Net sales decreased to $251.0 million compared to $283.9 million, primarily due to an overall decrease in the price of gold during the quarter

�

Processed a total of 14.5 metric tons [one metric ton = 35,274 ounces] of 24-karat gold products, an increase of 11.5% compared to 13.0 metric tons

�

As a result of lower gold prices, the Company incurred a write-down of $6.3 million on the value of its inventory

�

Gross profit decreased to $10.0 million compared to $16.9 million, and gross margin was 4.0% compared to 5.9%, largely as a result of this write-down of inventory

�

Net income was $5.2 million, or $0.08 per share, compared to $11.0 million, or $0.17 per share

�

2014 Nine Month Financial Highlights (all results are compared to prior year period)

�

Net sales increased to $898.2 million compared to $872.3 million

�

Processed a total of 46.9 metric tons of 24-karat gold products, an increase of 27.4% compared to 36.8 metric tons

�

Net income increased 92.8% to $39.2 million, or $0.59 per share, from $20.4 million, or $0.32 per share

�

Book value per diluted share of $3.77 at September 30, 2014 compared to $3.35 at December 31, 2013

�

Outlook for 2014

�

Company reiterates 2014 guidance of between 60 metric tons and 70 metric tons of gold processed during 2014

�

Expects international business to continue to expand. The Company delivered an initial shipment of 24-karat gold jewelry product samples to the Middle East Region in October 2014

�

Mr. ZhiHong Jia, Chairman and CEO of the Company, commented, “Kingold has continued to report profitable results despite a challenging gold market. We processed 14.5 metric tons of gold during the quarter and continue to increase our sales volume by expanding our sales channels both in China and overseas. However, we are continuing to focus on properly balancing our product mix and focusing on customized production, which increased as a percentage of our overall business during the quarter. We believe that this will enable Kingold to both leverage its expertise in design and manufacturing as well as help to alleviate its inventory risk. We are working diligently to ensure that the Company is well-positioned to grow despite gold pricing headwinds. We believe that our business is a flexible and sustainable model, and have been pleased to see steady demand from our customer base. We remain on track to meet our projected gold processed volume of between 60 metric tons and 70 metric tons during 2014.”

�

�

Update on Industrial Park

Chairman Jia added, “We are pleased with the construction progress of the Kingold International Jewelry and Cultural Industry Park, and are working aggressively on pre-leasing rental spaces. We anticipate utilizing the advanced rental fees and capital gain from the presales to further enhance the construction of the Jewelry Park.”

�

2014 Third Quarter Operational Review

�

In the third quarter of 2014, Kingold processed approximately 14.5 metric tons of 24-karat gold products, an increase of 11.5% over the 13.0 metric tons processed in the third quarter of 2013.

�

Metric Tons of Gold Processed
�	Three Months Ended:
�	September 30, 2014		September 30, 2013
�	Volume	% of Total	Volume	% of Total
Branded*	6.5	44.8%	7.2	55.2%
Customized**	8.0	55.2%	5.8	44.8%
Total	14.5	100%	13.0	100%
�	Nine Months Ended:
�	September 30, 2014		September 30, 2013
�	Volume	% of Total	Volume	% of Total
Branded*	23.1	49.3%	20.3	55.2%
Customized**	23.8	50.7%	16.5	44.8%
Total	46.9	100%	36.8	100%

�

*

Branded Production:

The Company acquires gold from the Shanghai Gold Exchange to produce branded products.

**

Customized Production:

Clients who purchase customized products supply gold to the Company for processing.

�

For the three months ended September 30, 2014, the Company processed a total of 14.5 metric tons of gold, of which branded production was 6.5 metric tons, representing 44.8% of net sales, and customized production was 8.0 metric tons, representing 55.2% of net sales in the third quarter of 2014. In the third quarter of 2013, the Company processed a total of 13.0 metric tons, of which branded production was 7.2 metric tons, or 55.2% of the net sales, and customized production was 5.8 metric tons, or 44.8% of the net sales.

�

2014 Third Quarter Financial Review

�

Revenues

Net sales for the three months ended September 30, 2014 was $251.0 million, compared to $283.9 million for the same period in 2013. The decrease was primarily due to an overall decrease in the price of gold in the third quarter of 2014.

�

Net sales for the nine months ended September 30, 2014 were $898.2 million, an increase of 3.0% from the $872.3 million reported in the same period of the prior year. The increase in net sales was primarily driven by increased branded production in the amount of $113.2 million, offset by approximately $97.3 million due to the decrease in the price of gold, with the remaining increase due to gains from exchange rate fluctuations.

�

On October 28, 2014, Kingold signed a Cooperation Agreement of Precious Metal Products with Hubei Bank Corporation Limited to design and manufacture 24-karat gold investment-oriented products. The Company now sells its investment gold products through the following bank partners: Bank of Communications, China Merchant Bank, CITIC Bank, Wuhan Rural Commercial Bank, China Construction Bank, Xingye Bank, and Hubei Bank. The Company’s investment gold products are now being resold in a number of provinces throughout China, including Beijing, Hubei, Jiangsu, Jiangxi, Liaoning, Zhejiang, Henan and Sichuan Provinces. The Company’s total sales from its investment gold business were $19.1 million for the first nine months of 2014.

�

�

�

Gross Profit

Gross profit for the three months ended September 30, 2014 was $10.0 million, a decrease of 41.0%, from $16.9 million for the same period in 2013.

�

Gross profit for the nine months ended September 30, 2014 increased to $62.3 million, an increase of 90.2%, from $32.7 million for the same period in 2013.

�

Gross Margin

The Company’s gross margin was 4.0% for the three months ended September 30, 2014, compared to 5.9% in the prior year period. The primary reason for the decrease was a $6.3 million write-down of inventory in the third quarter of 2014, which more than offset the margin improvement from the increase in customized production.

�

The Company’s gross margin for the nine months ended September 30, 2014 was 6.9%, up from 3.8% in the prior year period. The substantial increase was due to the fact that the Company purchased large quantities of gold inventory at year end 2013 and beginning of 2014 at low market prices, making the first half production at a cost much lower than normal. Gold prices increased from $1,204.5 per ounce on December 31, 2013 to as high as $1,385.0 per ounce on March 14, 2014 before decreasing to $1,216.5 on September 30, 2014.

�

Net Income

Net income for the three months ended September 30, 2014 was $5.2�million, or $0.08 per diluted share based on 66.1 million weighted average diluted shares outstanding, compared to net income of $11.0 million in the prior year period, or $0.17 per diluted share based on 64.5 million weighted average diluted shares outstanding in the prior-year period.

�

Net income for the nine months ended September 30, 2014 was $39.2 million, or $0.59 per diluted share based on 66.3 million weighted average diluted shares outstanding, compared to net income of $20.4 million in the prior year period, or $0.32 per diluted share based on 63.3 million weighted average diluted shares outstanding, in the prior-year period.

�

Balance Sheet and Cash Flow

�

(in millions except for percentages)

�

9/30/2014

�

�

12/31/2013

�

�

% Changed

�

Cash

�

$

6.9

�

�

�

2.3

�

�

�

186.7%

�

Inventories (gold)

�

�

215.7

�

�

�

174.4

�

�

�

23.6%

�

Working Capital

�

�

224.5

�

�

�

199.8

�

�

�

12.4%

�

Stockholders’ Equity

�

�

250.0

�

�

�

214.9

�

�

�

16.2%

�

�

Net cash provided by operating activities was $6.5 million for the nine months ended September 30, 2014, compared with net cash provided by operating activities of $6.3 million for the same period in 2013. The change was mainly because of the increase in net income, which was offset by the increase in inventory.

�

Kingold’s net cash from operating activities can fluctuate significantly due to changes in inventories (principally gold). Other factors that may vary significantly include the Company’s purchases of gold and income taxes. The Company expects that the net cash it generates from operating activities will continue to fluctuate as the Company’s inventories, receivables, accounts payables, and the other factors described above change with increased production and the purchase of larger quantities of raw materials (principally gold).

�

�

�

Outlook for 2014

Based on its existing resources and capacity, strong demand for 24-karat gold products in China and continued efforts in building market share, the Company reiterates that its gold processed is expected to be between 60 metric tons and 70 metric tons during 2014.

�

Conference Call Details

Kingold also announced that it will discuss these financial results in a conference call on November 14, 2014, at 8:30 AM ET.

�

The dial-in numbers are:

�

Live Participant Dial In (Toll Free):	�	877-407-9038
Live Participant Dial In (International):	�	201-493-6742

�

The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Kingold's website at www.kingoldjewelry.com, or click on the following link:��http://kingoldjewelry.equisolvewebcast.com/q3-2014. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.

�

About Kingold Jewelry, Inc.

Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, one of China's largest cities, was founded in 2002 and today is one of China's leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products. The Company sells both directly to retailers as well as through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. For more information, please visit www.kingoldjewelry.com.

Business Risks and Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as “expects,” “believe,” “project,” “anticipate,” or similar expressions. The forward-looking statements in this release include statements regarding Kingold’s outlook with respect to its sales volume in sales channels in both China and overseas, Kingold’s ability to balance branded and customized production and the resulting impact on the Company’s inventory risk, Kingold’s outlook for continued growth in 2014, as well as Kingold’s expectations with respect to presale approval at the planned Kingold International Jewelry and Cultural Industry Park and the effect of such approval on its ability to finance the construction of the Park. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. Forward-looking statements are subject to a number of risks, including those contained in Kingold's SEC filings available at www.sec.gov, including Kingold's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Kingold undertakes no obligation to update or revise any forward-looking statements for any reason.

�

�

Company Contact
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)

[email protected]

INVESTOR RELATIONS
The Equity Group Inc.
Katherine Yao, Associate
+86 10-6587-6435
[email protected]

�

Adam Prior, Senior Vice President
(212) 836-9606
[email protected]

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�

�

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KINGOLD JEWELRY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(IN U.S. DOLLARS)

(UNAUDITED)

�

�

�

For the three months ended September 30,

�

�

For the nine months ended September 30,

�

�

�

2014

�

�

2013

�

�

2014

�

�

2013

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET SALES

�

$

251,006,255

�

�

$

283,890,000

�

�

$

898,225,518

�

�

$

872,340,210

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

COST OF SALES

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Cost of sales

�

�

(240,742,984

)

�

�

(266,705,520

)

�

�

(834,987,086

)

�

�

(838,673,009

)

Depreciation

�

�

(307,790

)

�

�

(304,815

)

�

�

(922,756

)

�

�

(906,590

)

Total Cost of Sales

�

�

(241,050,774

)

�

�

(267,010,335

)

�

�

(835,909,842

)

�

�

(839,579,599

)

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

GROSS PROFIT

�

�

9,955,481

�

�

�

16,879,665

�

�

�

62,315,676

�

�

�

32,760,611

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

OPERATING EXPENSES

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Selling, general and administrative expenses

�

�

1,699,795

�

�

�

1,143,882

�

�

�

5,318,285

�

�

�

3,139,638

�

Stock compensation expenses

�

�

612,995

�

�

�

375,002

�

�

�

1,838,985

�

�

�

1,133,790

�

Depreciation

�

�

30,228

�

�

�

36,293

�

�

�

92,268

�

�

�

110,286

�

Amortization

�

�

3,068

�

�

�

26

�

�

�

9,222

�

�

�

6,080

�

Total Operating Expenses

�

�

2,346,086

�

�

�

1,555,203

�

�

�

7,258,760

�

�

�

4,389,794

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

INCOME FROM OPERATIONS

�

�

7,609,395

�

�

�

15,324,462

�

�

�

55,056,916

�

�

�

28,370,817

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

OTHER EXPENSE

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Interest expense

�

�

(577,858

)

�

�

(96,866

)

�

�

(1,539,249

)

�

�

(290,914

)

Total Other Expense

�

�

(577,858

)

�

�

(96,866

)

�

�

(1,539,249

)

�

�

(290,914

)

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

INCOME FROM OPERATIONS BEFORE TAXES

�

�

7,031,537

�

�

�

15,227,596

�

�

�

53,517,667

�

�

�

28,079,903

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

INCOME TAX PROVISION (BENEFIT)

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Current

�

�

3,373,114

�

�

�

3,402,482

�

�

�

15,577,085

�

�

�

8,197,780

�

Deferred

�

�

(1,575,575

)

�

�

830,419

�

�

�

(1,301,027

)

�

�

(471,468

)

TOTAL INCOME TAX PROVISION

�

�

1,797,539

�

�

�

4,232,901

�

�

�

14,276,058

�

�

�

7,726,312

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME

�

�

5,233,998

�

�

�

10,994,695

�

�

�

39,241,609

�

�

�

20,353,591

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

OTHER COMPREHENSIVE INCOME (LOSS)

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Total Foreign Currency Translation Gains (Loss)

�

�

72,284

�

�

�

1,278,588

�

�

�

(1,594,156

)

�

�

4,780,603

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME

�

$

5,306,282

�

�

$

12,273,283

�

�

$

37,647,453

�

�

$

25,134,194

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Earnings per share

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Basic

�

$

0.08

�

�

$

0.17

�

�

$

0.60

�

�

$

0.32

�

Diluted

�

$

0.08

�

�

$

0.17

�

�

$

0.59

�

�

$

0.32

�

Weighted average number of shares

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Basic

�

�

65,953,462

�

�

�

64,334,400

�

�

�

65,905,667

�

�

�

63,073,008

�

Diluted

�

�

66,137,568

�

�

�

64,486,938

�

�

�

66,285,370

�

�

�

63,310,034

�

�

�

KINGOLD JEWELRY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

(UNAUDITED)

�

�	�	September 30,		�	�	December 31,		�
�	�	2014		�	�	2013		�
�	�	�		�	�	�		�
ASSETS
�	�	�		�	�	�		�
CURRENT ASSETS	�	�	�	�	�	�	�	�
Cash	�	$	6,554,801	�	�	$	2,284,930	�
Restricted cash	�	�	16,709,130	�	�	�	12,668,749	�
Accounts receivable	�	�	13,668	�	�	�	532,386	�
Inventories, net	�	�	215,652,024	�	�	�	174,433,501	�
Other current assets and prepaid expenses	�	�	1,215,344	�	�	�	8,252,387	�
Due from related party	�	�	-	�	�	�	52,354,308	�
Value added tax recoverable	�	�	5,812,722	�	�	�	6,220,866	�
Deferred income tax assets	�	�	1,573,587	�	�	�	275,882	�
Total Current Assets	�	�	247,531,276	�	�	�	257,023,009	�
�	�	�	�	�	�	�	�	�
PROPERTY AND EQUIPMENT, NET	�	�	9,772,205	�	�	�	10,686,947	�
�	�	�	�	�	�	�	�	�
OTHER ASSETS	�	�	�	�	�	�	�	�
Deposit on land use right	�	�	47,177,693	�	�	�	32,721,442	�
Other assets	�	�	153,258	�	�	�	157,946	�
Land use right	�	�	494,403	�	�	�	507,117	�
Total Other Assets	�	�	47,825,354	�	�	�	33,386,505	�
TOTAL ASSETS	�	$	305,128,835	�	�	$	301,096,461	�
�	�	�	�	�	�	�	�	�
LIABILITIES AND STOCKHOLDERS' EQUITY
�	�	�	�	�	�	�	�	�
CURRENT LIABILITIES	�	�	�	�	�	�	�	�
Short term loans	�	$	16,247,746	�	�	$	49,572,985	�
Other payables and accrued expenses	�	�	2,667,052	�	�	�	3,499,717	�
Income tax payable	�	�	3,381,538	�	�	�	3,269,908	�
Other taxes payable	�	�	696,394	�	�	�	848,739	�
Total Current Liabilities	�	�	22,992,730	�	�	�	57,191,349	�
�	�	�	�	�	�	�	�	�
Long term loans	�	�	32,471,120	�	�	�	29,004,287	�
TOTAL LIABILITIES	�	�	55,463,850	�	�	�	86,195,636	�
�	�	�	�	�	�	�	�	�
�	�	�	�	�	�	�	�	�
EQUITY	�	�	�	�	�	�	�	�
Preferred stock, $0.001 par value, 500,000 shares	�	�	�	�	�	�	�	�
authorized, none issued or outstanding	�	�	�	�	�	�	�	�
as of September 30, 2014 and December 31, 2013	�	�	-	�	�	�	-	�
Common stock $0.001 par value, 100,000,000 shares	�	�	�	�	�	�	�	�
authorized, 65,953,462 and 64,953,462 shares issued and outstanding	�	�	�	�	�	�	�	�
as of September 30, 2014 and December 31, 2013	�	�	65,953	�	�	�	64,953	�
Additional paid-in capital	�	�	79,239,190	�	�	�	76,847,205	�
Retained earnings	�	�	�	�	�	�	�	�
��Unappropriated	�	�	154,911,706	�	�	�	120,946,375	�
��Appropriated	�	�	967,543	�	�	�	967,543	�
Accumulated other comprehensive income	�	�	14,480,593	�	�	�	16,074,749	�
Total Stockholders' Equity	�	�	249,664,985	�	�	�	214,900,825	�
TOTAL LIABILITIES AND EQUITY	�	$	305,128,835	�	�	$	301,096,461	�

�

�

�

KINGOLD JEWELRY, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(IN U.S. DOLLARS)

(UNAUDITED)

�

�	�	For the nine months ended September 30,						�
�	�	2014		�	�	2013		�
CASH FLOWS FROM OPERATING ACTIVITIES	�	�	�	�	�	�	�	�
Net income	�	$	39,241,609	�	�	$	20,353,591	�
Adjusted to reconcile net income to cash provided by	�	�	�	�	�	�	�	�
operating activities:	�	�	�	�	�	�	�	�
Depreciation	�	�	1,015,024	�	�	�	1,016,876	�
Amortization of intangible assets	�	�	9,222	�	�	�	6,080	�
Share based compensation	�	�	1,838,985	�	�	�	1,133,790	�
Inventory valuation allowance	�	�	6,301,209	�	�	�	7,115,531	�
Deferred tax benefit	�	�	(1,301,027	)	�	�	(471,468	)
Changes in operating assets and liabilities	�	�	�	�	�	�	�	�
(Increase) decrease in:	�	�	�	�	�	�	�	�
Accounts receivable	�	�	515,603	�	�	�	425,686	�
Inventories	�	�	(48,770,478	)	�	�	(22,251,264	)
Other current assets and prepaid expenses	�	�	8,136,861	�	�	�	(291,007	)
Value added tax recoverable	�	�	365,586	�	�	�	(989,335	)
Increase (decrease) in:	�	�	�	�	�	�	�	�
Other payables and accrued expenses	�	�	(826,274	)	�	�	(444,964	)
Income tax payable	�	�	134,356	�	�	�	756,440	�
Other taxes payable	�	�	(146,645	)	�	�	(55,351	)
Net cash provided by operating activities	�	�	6,514,031	�	�	�	6,304,605	�
�	�	�	�	�	�	�	�	�
CASH FLOWS FROM INVESTING ACTIVITIES	�	�	�	�	�	�	�	�
Cash deposit for land use right	�	�	(14,694,597	)	�	�	-	�
Purchase of property and equipment	�	�	(173,164	)	�	�	(53,669	)
Net cash used in investing activities	�	�	(14,867,761	)	�	�	(53,669	)
�	�	�	�	�	�	�	�	�
CASH FLOWS FROM FINANCING ACTIVITIES	�	�	�	�	�	�	�	�
Proceeds from bank loans-short term	�	�	23,991,542	�	�	�	-	�
Repayments of bank loans-short term	�	�	(57,010,410	)	�	�	-	�
Proceeds from long term loan	�	�	3,671,113	�	�	�	-	�
Restricted cash	�	�	(4,132,361	)	�	�	(4,284,287	)
Proceeds from related party loan	�	�	64,990,983	�	�	�	1,501,252	�
Repayments of related party loan	�	�	(12,998,197	)	�	�	-	�
Cash dividend paid	�	�	(5,276,277	)	�	�	-	�
Net proceeds from exercise of warrants	�	�	-	�	�	�	4,500,000	�
Net proceeds from stock issuance	�	�	-	�	�	�	12,522,000	�
Net cash provided by financing activities	�	�	13,236,393	�	�	�	14,238,965	�
�	�	�	�	�	�	�	�	�
EFFECT OF EXCHANGE RATES ON CASH	�	�	(612,792	)	�	�	283,017	�
�	�	�	�	�	�	�	�	�
NET INCREASE IN CASH	�	�	4,269,871	�	�	�	20,772,918	�
�	�	�	�	�	�	�	�	�
CASH, BEGINNING OF PERIOD	�	�	2,284,930	�	�	�	2,544,114	�
�	�	�	�	�	�	�	�	�
CASH, END OF PERIOD	�	$	6,554,801	�	�	$	23,317,032	�
�	�	�	�	�	�	�	�	�
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION	�	�	�	�	�	�	�	�
�	�	�	�	�	�	�	�	�
Cash paid for interest expense	�	$	10,192,638	�	�	$	3,235,628	�
Cash paid for income tax	�	$	15,442,729	�	�	$	7,441,340	�

�

�

�

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